Bonterra Energy Corp.

Bonterra Energy Corp.

February 14, 2012 07:02 ET

Bonterra Energy Corp. Announces Record Production in Fourth Quarter and Full Year 2011 and Provides an Operational Update

CALGARY, ALBERTA--(Marketwire - Feb. 14, 2012) - Bonterra Energy Corp. ("Bonterra" or "the Company") ( (TSX:BNE) is pleased to provide an operational update including 2011 highlights and the results of its independent reserve report prepared by Sproule Associates Limited with an effective date of December 31, 2011.

In 2011, Bonterra continued to provide shareholders with production and reserves growth on a total and per share basis and paid out $3.04 per share in dividends, a 22 percent increase over 2010. The Company's corporate strategy continues to focus on creating value by maintaining a sustainable pace of development and employing efficient operating practices.

2011 Operational Highlights

  • Record average daily production for the full year of 6,322 barrels of oil equivalent (BOE) per day (70.6 percent oil and liquids), an increase of 12.3 percent over the same period in 2010.
  • Record average daily production of 6,679 BOE per day in the fourth quarter, an increase of 9.9 percent when compared to the fourth quarter of 2010.
  • Exit rate production of approximately 6,900 BOE per day, matching the Company's high-end of its guidance of 6,800 to 6,900 BOE per day.
  • Production per share increased to 0.119 BOE per share, an increase of 9.2 percent over 2010.
  • Proved plus Probable (P+P) reserves of 41.2 million BOE (approximately 74 percent oil and liquids), a 4.6 percent increase over December 2010 reserves of 39.4 million BOE.
  • Added a total of 4.1 million BOE (P+P) reserves which equates to 1.75 times 2011 production.
  • Reserves per share (P+P) increased two percent to 2.13 BOE per share compared to the prior year.
  • Reserve life index of 16.9 years on P+P basis and 12.9 years on a proved basis continues to remain above industry average.

The Company has not released its audited 2011 financial results therefore the numbers provided above are currently estimates and unaudited.

Well Positioned for Continued Growth in 2012

Bonterra continued to develop its Cardium halo acreage in 2011, drilling 21 gross (15.3 net) horizontal wells. The Company also successfully participated in drilling two gross (0.3 net) main Cardium pool wells in the Berrymoor Unit which followed up a successful program of five gross (0.75 net) wells drilled in the unit in 2010. Results to date have been extremely encouraging with the majority of these wells outperforming expectations.

The year 2011 saw a marked increase in industry activity within the main Pembina pool with expanded horizontal infill drilling programs by a number of Bonterra's peers. Positive results to date suggest that a significant recoverable resource remains. Bonterra has identified 550 gross (350 net) possible horizontal infill locations within its acreage in the main pool. 110 gross (77.3 net) horizontal PUDS are reflected in Bonterra's 2011 reserve report constituting a three-year drilling program. Bonterra intends to focus the majority of its $65 million 2012 capital program on realizing value from its main pool assets through an aggressive horizontal drill program. Full year production levels in 2012 are expected to average in a range of 6,700 to 7,000 BOE per day.

Horizontal development of the main pool is an evolution of Bonterra's historic approach to exploiting its Cardium play that was previously achieved by drilling vertical infill wells. To reflect this approach, Bonterra cancelled 60 (48.31 net) vertical PUDs some of which were rescheduled as horizontal locations. As main pool horizontal infill drilling has less production history associated with it, the canceling of the vertical PUDs has had an overall negative impact on Proved reserves and therefore moderated growth in P+P reserves. Proved reserves decreased by less than two percent from 28.6 MBOE at December 31, 2010 to 28.1 MBOE at December 31, 2011 while P+P reserves increased approximately five percent to 41.2 million BOE over the previous year.

In 2011, Finding and Development and Acquisition (FD&A) costs were impacted by the negative revision discussed above. FD&A costs excluding future development costs increased to $33.22 per BOE on a proved basis and $15.38 per BOE on a P+P basis. FD&A costs on a three-year average remain competitive within industry with three year-average costs of $14.84 per BOE on a proved basis and $9.75 per BOE on a P+P basis.

Bonterra fully expects to see improvements in FD&A costs and reserves in the future as horizontal exploitation of the main Pembina pool matures.

Corporate Reserves Information:

Bonterra engaged the services of Sproule Associates Limited to prepare a reserve evaluation with an effective date of December 31, 2011. The gross reserve figures from the following tables represent Bonterra's ownership interest before royalties and before consideration of the Company's royalty interests. Tables may not add due to rounding.

Summary of Gross Oil and Gas Reserves as of December 31, 2011

Reserve Category: Light and Medium Oil (Mbbl ) Natural Gas (MMcf ) Natural Gas Liquids (Mbbl ) BOE(1) (MBOE )
Developed Producing 13,949.8 29,478 1,162.4 20,025.2
Developed Non-Producing 98.8 2,426 52.1 555.2
Undeveloped 5,484.0 9,918 413.1 7,550.1
TOTAL PROVED 19,532.5 41,822 1,627.6 28,130.4
PROBABLE 8,536.7 22,119 795.6 13,018.8
TOTAL PROVED PLUS PROBABLE 28,069.2 63,941 2,423.2 41,149.2

Reconciliation of Company Gross Reserves by Principal Product Type as of December 31, 2011

Light and Medium Oil and Natural Gas Liquids

Natural Gas


Proved (Mbbl
) Proved plus Probable (Mbbl )

Proved (Mmcf
) Proved plus Probable (Mmcf )

Proved (MBOE
) Proved Plus Probable (MBOE )
December 31, 2010 22,158.5 30,448.4 38,500 53,692 28,575.2 39,397.1
Extension 4,356.0 7,547.9 7,507 12,418 5,607.2 9,617.6
Improved Recovery 0 0 0 0 0 0
Technical Revisions (3,638.1 ) (5,762.9 ) 556 2,712 (3,545.4 ) (5,310.9 )
Discoveries 0 0 0 0 0 0
Acquisitions 0 0 0 0 0 0
Dispositions 0 0 0 0 0 0
Economic factors (56.7 ) (81.4 ) (665 ) (805 ) (167.5 ) (215.6 )
Production (1,659.6 ) (1659.6 ) (4,076 ) (4,076 ) (2,338.9 ) (2,338.9 )
December 31, 2011 21,160.1 30,492.4 41,822 63,941 28,130.4 41,149.2

Summary of Net Present Values of Future Net Revenue as of December 31, 2011

Net Present Value Before Income Taxes
Discounted at (% per Year
($ Millions) 0 % 5 % 10 %
Reserve Category:
Developed Producing 910,796 570,817 426,424
Developed Non-Producing 15,763 12,397 10,427
Undeveloped 264,113 170,975 116,405
TOTAL PROVED 1,190,672 754,190 553,256
PROBABLE 711,365 312,222 175,494
TOTAL PROVED PLUS PROBABLE 1,902,037 1,066,411 728,749

Finding, Development and Acquisition (FD&A) Costs

The Company has historically been active in its capital development program. Over three years, Bonterra has incurred the following FD&A (3) costs excluding Future Development Costs:

2011 FD&A Costs per BOE(1)(2)(3 ) 2010 FD&A Costs per BOE(1)(2)(3 ) 2009 FD&A Costs per BOE(1)(2)(3 ) Three Year Average(4 )
Proved Reserve Net Additions $ 33.22 $ 13.89 $ 7.32 $ 14.84
Proved plus Probable Reserve Net Additions $ 15.38 $ 13.02 $ 3.94 $ 9.75

Over three years, Bonterra has incurred the following FD&A (3) costs including Future Development Costs:

2011 FD&A Costs per BOE(1)(2)(3 ) 2010 FD&A Costs per BOE(1)(2)(3 ) 2009 FD&A Costs per BOE(1)(2)(3 ) Three Year Average(5 )
Proved Reserve Net Additions $ 57.53 $ 21.98 $ 16.23 $ 18.54
Proved plus Probable Reserve Net Additions $ 35.40 $ 19.19 $ 11.01 $ 13.03
  1. Barrels of Oil Equivalent may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 MCF: 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
  2. The aggregate of the exploration and development costs incurred in the most recent financial year and the change during that year in estimated future development costs generally will not reflect total finding and development costs related to reserve additions for that year.
  3. FD&A costs are net of proceeds of disposal and the FD&A costs per BOE are based on reserves acquired net of reserves disposed of.
  4. Three year average is calculated using three year total capital costs and reserve additions on both a Proved and Proved plus Probable basis.
  5. Three year average is calculated using three year total capital costs and reserves additions on both a Proved and Proved plus Probable basis plus the average change in future capital costs over the three year period.

Certain financial and operating information, such as production information, finding and development costs and net asset values, included in this press release for the quarter and year ended December 31, 2011 are based on estimated unaudited financial results for the year and are subject to the same limitations as discussed under Forward Looking Statements set out below. These estimated amounts may change upon the completion of audited financial statements for the year ended December 31, 2011 and changes could be material. All reserve numbers provided above are Bonterra's interest before royalties.

It should not be assumed that the estimates of future net revenue presented in the above tables represent the fair market value of the reserves. There is no assurance that the forecast prices and costs assumptions will be attained and variances could be material. Estimates of reserves and future net revenues for individual properties may not reflect the same confidence level as estimates of reserves and future net revenues for all properties due to the effects of aggregation.

Caution Regarding Engineering Terms:

Bonterra converts certain natural gas volumes to MBOE on the basis of one bbl to six Mcf. Any figure presented in MBOE or MBOE per day may be misleading, particularly if used in isolation. A conversion ratio of six Mcf of natural gas to one barrel of oil equivalent is based on an energy equivalency conversion method primarily applicable at the burner tip and does not necessarily represent value equivalency at the wellhead. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.

Caution Regarding Forward Looking Information:

Certain information set forth in this press release, including management's assessment of Bonterra's future plans and operations, contains forward-looking statements. By their nature, forward-looking statements are subject to numerous risks and uncertainties, some of which are beyond Bonterra's control, including the impact of general economic conditions, industry conditions, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other industry participants, the lack of availability of qualified personnel or management, stock market volatility and ability to access sufficient capital from internal and external sources. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. Bonterra's actual results, performance or achievement could differ materially from those expressed in, or implied by these forward-looking statements, and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits that Bonterra will derive therefrom. Bonterra disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Contact Information

  • Bonterra Energy Corp.
    George F. Fink
    Chairman and CEO
    (403) 262-5307
    (403) 265-7488 (FAX)

    Bonterra Energy Corp.
    Randy M. Jarock
    President and COO
    (403) 262-5307
    (403) 265-7488 (FAX)

    Bonterra Energy Corp.
    Kirsten Lankester
    Manager, Investor Relations
    (403) 262-5307
    (403) 265-7488 (FAX)